Silver Price Retreats as Dollar Recovers Amid Fed Rate-Cut Uncertainty

Key Takeaways:

• Silver price drops from $30.00 due to US Dollar recovery.
• Market divided on potential Fed rate-cut size in September.
• Silver finds support near 50-period EMA on a four-hour timeframe.
• US core PCE data could impact future rate-cut expectations.

US Dollar Recovery Puts Pressure on Silver

Silver price (XAG/USD) experiences a significant decline from the $30.00 psychological resistance in the European session on Wednesday. This drop is fueled by a modest rebound in the US Dollar (USD), which had recently hit a year-to-date low. The strengthening USD tends to negatively impact the Silver price as it makes the precious metal more expensive for investors.

US Dollar Uncertainty Ahead of Core PCE Data

The US Dollar Index (DXY), reflecting the Dollar’s performance against major currencies, sees a slight recovery towards 100.85 from 100.50, while 10-year US Treasury yields hover around 3.82%. This USD uptick comes amidst market uncertainty prior to the release of the US core Personal Consumption Expenditure inflation (PCE) data for July. Traders remain unsure about the possible Federal Reserve (Fed) rate cut in September, with opinions divided on the magnitude of the expected reduction.

Impact of Core PCE Data on Rate-Cut Expectations

The upcoming core PCE price index data is crucial as it can influence market sentiments regarding the extent of interest rate cuts by the Fed in September. Economic analysts anticipate a rise in annual underlying inflation to 2.7% in July from 2.6%, with monthly price pressures increasing by 0.2%.

Silver Technical Analysis

Silver price is currently trading in a Rising Channel chart pattern on a four-hour timeframe, indicating that pullbacks are viewed as buying opportunities. The 50-period Exponential Moving Average (EMA) near $29.40 continues to act as a support level for Silver bulls. The 14-period Relative Strength Index (RSI) suggests a phase of consolidation is forthcoming, as it remains within the 40.00-60.00 range.

Silver FAQs

Silver holds a significant position in the investment world as a precious metal valued for its intrinsic properties and various industrial uses. Investors often turn to Silver for portfolio diversification or as a hedge during times of economic uncertainty. Factors influencing Silver prices range from geopolitical tensions and economic trends to industrial demand and currency fluctuations.